Three Ways to Encourage Younger Generations to Begin Saving for Retirement

Image: Three Ways to Encourage Younger Generations to Begin Saving for Retirement

If you’re like a lot of people, you have a love-hate relationship with your alarm clock. While we can appreciate that it helps us wake up on time so we can earn a paycheck, our appreciation only slightly outweighs our desire to smash it with a hammer each and every morning. But as owners of these bittersweet little machines, we do yield a great power over them…the snooze button. With the simple push of a button, we’re able to forget about our morning tasks in favor of 10 more minutes of rest, which will surely make today that much better.

Unfortunately, saving money for retirement is also seemingly suffering from a snooze button, especially among younger generations. In fact, among savers between the ages of 25-44, only about 25 percent are on track to meet their retirement goals.1 A lack of retirement savings, when combined with large levels of debt and a high unemployment rate, can cause younger generations to struggle reaching retirement readiness when the time comes. And while it may seem difficult today, trying to play catch up on savings later in life can be even more challenging. Luckily, as a retirement plan sponsor or financial advisor, there are a variety of easy ways to encourage young savers to start socking away money for the future.


Encouraging young workers to save for retirement

Provide financial education

Gone are the days of once-popular defined benefit retirement plans, when employers bore the brunt of the responsibility for ensuring employee retirement readiness. And because the way we save for retirement has changed over the years, so should the way we talk about it. Employees went from needing to know next to nothing about their retirement plan to needing to be on top of many plan details—such as enrollment eligibility, vesting schedules, employer matching contributions, and the like.

Providing financial education to employees will not only go a long way in raising awareness of plan details, but could also increase their productivity while on the clock. In fact, over 70 percent of employees are stressed about their finances—and even worse, those who report feeling financial stress say they lose roughly 11 hours in productivity every week.2 It’s clear, then, that poor retirement planning and inadequate savings affect more than just the employee.

Showcase the value of saving early

One of the most brilliant minds in history once said, "Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn’t, pays it." And while compound interest may not actually be a magical force, it certainly seems like it is. Compounding interest, in relation to retirement savings, is interest on savings that has started accumulating interest itself—creating somewhat of a snowballing effect. And since young savers have so much time left on their timecard before reaching full retirement age, compounding interest has plenty of time to work its wonder, just as Einstein said, and grow the nest egg.

Put retirement savings on autopilot

Newton’s law of inertia tells us that an object at rest will stay at rest, while an object in motion will stay in motion, unless influenced by an outside force. But how does that apply to retirement savings?

When a new employee is hired, they are significantly less likely to enroll in a retirement savings plan if they have to go out of their way to do so than if they don’t even have to think about it. Objects at rest, right? Plans with automatic enrollment have a 13 percent higher participation rate among employees than plans without—and once participants are enrolled and contributing to the plan, employers can further help keep employees on track by implementing auto escalation.2

Share with clients: Benefits of Automatic Enrollment in a Retirement Plan

Helping younger generations own their retirement readiness at an early age will take more than just one plan sponsor or financial advisor, but don’t let that discourage you from trying. We can look to the future and work together to build a next generation that thrives on saving early and often. It won’t be easy, but the trouble is worth it.

Just like that alarm clock, it can be tempting for younger generations to delay something with future benefits—like saving for retirement—in favor of something exciting right now. But with hard work and financial education, we can take hands off the snooze button, turn savings uncertainty into retirement reality, and convince young employees that saving for retirement should be the priority—not a vacation.

For more helpful tools and resources for advisors, visit our Advisor Toolkit.



1"Inside Retirement Plans – Ascensus Savings Trends." Accessed April 12, 2023.

2"The Well-Being Equation: Helping Employees Thrive in Uncertain Economic Times.” Accessed April 12, 2023.